Personal finance expert Suze Orman

The Emmy-winning TV show host and best-selling author shares why she feels the credit scoring system is “broken” and discusses women in poverty.

Suze Orman wants to change the way America thinks about money, and millions turn to her for financial advice. A best-selling author, she also reaches out to her audience through magazine and online columns and as a writer-producer and two-time Emmy-winning TV host. She's won an unprecedented six Gracie awards, which recognizes the country's best radio, TV and cable programming for, by and about women. Called a "one-woman financial-advice powerhouse" by USA Today, Orman is a certified financial planner and one of the world's top motivational speakers.

TRANSCRIPT

Tavis: Always pleased to have Suze Orman on this program, especially since this is the first time – I’ve been doing this show, what, ten years? It’s the first time you’ve actually been on the set as opposed to a satellite feed. You got to come to L.A. more often.

Suze Orman: Hey, I’m gonna come to L.A.

Tavis: You should buy a house in L.A.

Orman: I’ll think about it [laugh].

Tavis: You do that. The Emmy-winning television host and personal best-selling author, perennial, I should say, best-selling author is now the host of the OWN series, “America’s Money Class.” The show airs Mondays at 9 on OWN, so first a look at “America’s Money Class” with Suze Orman.

[Clip]

Tavis: Maybe I can link these two things now since you closed with God’s eyes. Is your manhood connected to your money in God’s eyes?

Orman: Not in God’s eyes, but in one’s own eyes, Tavis. I don’t care how far we’ve come with “women’s liberation,” with all these things.

In a man’s mind, he still needs to be the support of his family. He needs to hold up the world. Now they’ll tell you they don’t mind. They’ll tell you they don’t care if their wife’s making more money than them. I do not believe it, I do not believe it, I do not believe it.

We just saw that example. There’s something very demeaning when a man has been making money, now he’s lost his job, now he can’t find another job and it’s been six months, one year, two years, and the only reason the family’s going on is because of the wife. Now I can relate to that because that was my daddy. That was my mommy.

My mom was a secretary. My dad kept failing and failing and failing. You could see his manhood go because back then, remember, I was born in 1951. Women didn’t work back then, but mommy had to work. She had to sell Avon on the side, secretary, she kept it going, so his manhood was seriously affected then, as well as the man today, in my opinion.

Tavis: Well, to your point now, if these numbers are real, there must be a lot of men then struggling with manhood right about now.

Orman: Yes, but they don’t tell you that.

Tavis: Yeah.

Orman: They don’t tell you that. They always say it’s okay, but if you ask them the question, everything being the same, if you could make more money than your wife, would you? And they usually say, “Uh-huh.”

Tavis: See, I’d marry Oprah in a heartbeat. Just ask, Op, any time [laugh].

Orman: And here’s the problem. She’d have you sign a prenup so fast you wouldn’t know what hit you up side that head [laugh].

Tavis: And she should [laugh]. This conversation raises the next question for me, which is whether or not, whether you’re a man or a woman, you believe these unemployment numbers of late.

The White House, for obvious reasons, is buoyed by these numbers, but what does Suze Orman say about these unemployment numbers?

Orman: I’ve never believed unemployment numbers because the way that they calculate unemployment makes no sense whatsoever. It’s not how many people are unemployed. It’s how many people are actively looking for a job. Once you stop looking for a job, you are no longer considered part of the unemployment number. So when we go from a .9 or whatever to .3, it says nothing, to tell you the truth.

Now one thing that is a little bit uplifting here is the creation of jobs which is a more important, truthfully, Tavis, than unemployment. How many jobs are being created that could employ people? You know, in 2010, there were one million jobs created. In 2011, there were 1.8 million jobs created. In this year now, we are averaging about 200,000 new jobs a month.

So truthfully, when you look at President Obama and you look at those records, he’s growing it that way, but we’re still not growing fast enough that it really – you know, the people who are in poverty today, they’re not feeling it, Tavis. They’re just not feeling it.

Tavis: Which is my next question, how it is on the campaign trail you sell to the American people that things are getting better if they don’t feel it? You look at your money class and people are feeling more pinched and more crunched now than ever before. The numbers say one thing and people are feeling something else. How do you sell that?

Orman: You sell that by the people who aren’t affected by the fact that there are maybe 100 million, 150 million people either in poverty or near poverty.

There are people that, truthfully, haven’t been affected by what happened. Either they didn’t own a home at the time, they didn’t have any money in the stock market ’cause they were just kind of getting by, so they didn’t see their equity go down, they didn’t see their accounts go down, and they have a job and they’re just getting by.

And when they feel a little bit hopeful, they’re the ones that are going out and spending money. To sell it to the people that are in poverty today, it’s almost impossible.

I’ve been saying lately that, in my opinion, America has a broken spirit, that the people that are saying, “Please help me, please let me keep my home, please let me keep my car, please recognize me as a vital human being,” they are falling on deaf ears.

When you’ve been battered down and battered down and battered down, your spirit gets broken. And if your spirit’s broken, what’s gonna pick you up? They’re not gonna be listening to a bunch of stuff on TV if they don’t feel that it’s talking to them, so it’s hard right now. It’s hard.

Tavis: I was sitting here thinking while you were giving me that last answer whether or not I should say this, and I think I will ’cause I haven’t made the public announcement yet, but I’ll do it now since you’re here ’cause it makes sense.

We were just talking a moment ago about whether or not one’s manhood is connected to money. As you know, ’cause we discussed this in Washington – I was so honored to have you on that stage.

Orman: No, I was honored to be on that stage with you. There has not been a place that I’ve been lately that I haven’t said, if you aren’t listening to what Tavis Smiley and Dr. West is doing, you are missing the conversation of America today.

They are the only two having a conversation that needs to be listened to. Everything else is just a bunch of words. You are speaking in truths. I was so honored to be there, I can’t tell you.

Tavis: Well, I appreciate it. You’re very kind, but having you and Michael Moore and all that wonderful panel was a wonderful conversation in Washington that we got a chance for three nights to re-broadcast here on PBS. So I was saying a moment ago that I’m about to make another announcement, but I’ll now make it on television tonight with you.

Sunday, March 18, I’m going to New York. I’m gonna continue, as you know, this poverty conversation throughout the year. The fastest-growing group of persons falling into poverty, as you well know, are women and children. Nobody talks about the fact that women and their babies are becoming poorer faster than anybody else in this country.

So, manhood and money, there is a connection, but women and their babies – the real question for me is what does it say about a nation that allows its women and its children – the younger you are, the more likely you are to be in poverty.

That’s a reality. In the western world, the gap between what men make and women make are wider. That gap is wider in this country than any place else in the western world. You know this stuff well ’cause you talk about it all the time.

So on Sunday, the 18th of March, I’m going to New York University to their Skirball Center for the Performing Arts and I’m having another conversation about poverty in America, this one just about women, children and poverty, and the entire panel is gonna be all women, and the audience is gonna be all women and their babies.

We’re gonna have a great conversation that we’re gonna record live for PBS. It’s gonna be another three-night conversation specifically and exclusively about women, children and poverty. I say all that to say that we’re gonna continue this conversation that we started in Washington.

Orman: I should hope. I’m thinking of my cities going March – ’cause I want – if you’ll have me, I want to be there. I want to be there, trust me.

Tavis: If you’re around, I’ll hold a seat for you. But the reason why I raised that is because I wanted to ask you specifically what you’re saying to women about their struggle and their babies. Because if men are catching hell in this patriarchal society, then women are really catching it.

Orman: Here’s what’s interesting about women. When it comes to their babies, when it comes to their children, they become these financial warriors like I have never seen before. They will not turn their back on the battlefield.

They will go out and get three, four, five jobs if they need to, to just make sure that their baby is okay. That doesn’t mean that they’re not in poverty. It doesn’t mean that they’re not living in their car. But they will not abandon their children on any level.

What women need to understand is that you cannot save a child if you can’t save yourself. Women need to turn their attention from saving their spouse, their mothers, their this, their that, their kids, to putting that financial oxygen mask on their face first. When they’re solid, they can pick up the whole world, Tavis.

For some reason with women, the conversation has to be “Why do you not matter?” Why is it that the only thing that matters in a woman’s life are her children or her parents and that it isn’t until she is 50 or 55 years of age that she comes on the scene and goes, “Oh, my God, what about me?”

So the conversation is an interesting one to have, but women are fighters. They will fight and fight and fight to get what they need, especially if they have children.

Tavis: Well, I figured since March is Women’s History Month, we might as well have a conversation.

Orman: Why not?

Tavis: You’ll hear more about it from me and in the media, but for a few consecutive nights in March, we’re going to re-broadcast this live conversation being recorded in New York on the 18th of March. So if you’re around New York, come see us. It’s free, open to the public. Come see us at NYU’s Skirball Center.

But more on that on our website in the coming days. Back to this conversation, though, about the here and the now. So this debit card.

Orman: Yeah, this prepaid card.

Tavis: Prepaid, sorry. I keep saying that. I want you to explain the difference to me.

Orman: Actually, that’s a very important thing.

Tavis: I want you to explain the difference.

Orman: All right. You have a bank. A bank makes money by doing what? By making loans. It’s cost them nothing to get money from the feds for new deposit money. They pay you nothing on it. They lend that money out. They make 4, 5, 6%. They make fees when you have…

Tavis: …crazy fees on these debit cards.

Orman: Crazy fees. When you have a credit card and you don’t pay it in full, they make 18%, 19% or 20% interest. So a bank has all kinds of ways to make fees and a lot of money. Every account at a bank usually comes with a debit card.

Now because they’re making fees on you everywhere else, not necessarily in a checking account, but by the other activities that they do, a bank should just be giving you a debit card for free. Many of them are. There is a big uproar ’cause Bank of America was going to charge you $5 a month for that.

Tavis: Smacked down on that, yeah.

Orman: Now a prepaid card. A prepaid card isn’t connected to a bank where a bank lends money and makes all this money and all these things. A prepaid card obviously is attached to a bank, but it’s just a bank that holds the money. They don’t make money off of you the way other banks do. So a prepaid card is for people – and there was an entire industry of these cards that started about seven or eight years ago.

People who have bounced checks two or three times, they go into a bank, they go into a credit union, and that bank or credit union says, “Sorry, you can’t open up a checking account with us ’cause you have bounced checks.” There are many people who don’t want to walk into a financial institution and open up an account. There are about 50 million people out there like that.

These people want to be able to, however, pay their bills online. They want to be able to go and charge something or put it on a card. They want to order things online. The only way for them to do this is with a card that they prepay into it and then, when they use it, the money is simply drawn out of it immediately.

But it is not attached to a bank that is making loans, charging late fees and all of these things. So a prepaid card is a very, very different instrument that is created for those who are truthfully in poverty.

Tavis: So why would Suze Orman then want to take the risk of putting her name and her reputation behind a prepaid card? Yours is called The Approved Card.

Orman: Yes.

Tavis: At this point in your career, why do this?

Orman: Imagine you waking up tomorrow and you can’t get a bank account; you can’t get a credit union account. Everything has gone away and you’re now living in poverty.

You’ve bounced every possible check you can, you have no money left. Somebody’s given you a little job. How do you transact business? How do you pay your utility bills? What do you do if you can’t get a checking account somewhere? What do you do? How do you do that, Tavis? You can’t.

Just because many of the prepaid cards, not all of them, but many of the prepaid cards have exorbitant fees, every time you pay a bill online, 99 cents. Every time you charge something, they were charging you a dollar. There are many prepaid cards out there that people are paying $35 to $50 a month just to have.

I wanted to come into this industry and say, “Just ’cause prepaid cards have been horrible, many of them, why can’t I create a great one so that people who have to use prepaid cards can do it for the least cost?” So I came out with a card that has a $3 a month fee. Now everybody freaked because of Bank of America. Again, there’s no other way to make money on these.

Why do I need to charge $3 a month? Well, somebody’s got to pay for the plastic. Somebody has to pay for the 24-hour-a-day telephone operators that are answering the phone. Somebody’s got to pay when you go to an Allpoint ATM and take money out on this card. If you have automatic deposit, it’s free. Somebody’s got to pay Allpoint because it’s not free.

So I decided people will get this. For $3, you could have four cards, 75 cents each. With those cards, you get free identity theft protection. With those cards, you get unlimited credit reports, unlimited credit scores, unlimited credit monitoring, all these services that normally cost people a lot of money.

The main thing that comes with this card is dignity, in a way, because you are being treated like a true human being. Every time you swipe it, it doesn’t cost you any money. Every time you pay a bill on line, it doesn’t cost you a penny. Every time you do something, you get a text that tells you how much money you have left in here. And people have gone nuts about this card.

Tavis: I’m glad you said that. We’ll come back. People have gone nuts about it in two ways. Nuts in terms of being excited about it, and nuts in terms of trying to destroy you and shut you down because you’re basically giving these cards away, you know, $3 a month.

Orman: And the reason is that many of the credit unions, I’ve heard, are afraid that I’m gonna take business away from them. I loved credit unions. This card isn’t hurting them.

This card, if it’s allowed to do everything that it’s supposed to do, will literally help people be able to eventually go to a credit union and be able to open up a credit union account and function in a way that many people are. But here’s the real story of this card. For the first time in history…

Tavis: …here’s the part I like right here, yeah.

Orman: Boy, people have jumped on me about this too. For the first time in history, this card will be sharing information with a major credit bureau, TransUnion.

Is it going to create a credit report for you? No. Is it going to create a credit score for you? No. But in the hopes that, over the next 18 to 24 months, TransUnion will be looking at all of the transactions. It’s anonymous, they’re aggregated, you have to opt in to be part of this program.

They will make a determination if debit card activity, if prepaid activity, if cash activity, can generate a credit score. Now why is that so important?

Tavis: Because you can’t do anything without a credit score.

Orman: And today, if you’re in poverty and all you have is a debit card or a prepaid card or you pay in cash, it does not report to a credit bureau. If it doesn’t report to a credit bureau, it cannot create a credit score for yourself.

So if we can now start to reward people who pay in cash via one of these cards or in cash versus penalizing them, we’ve now changed the system.

Understand this very well. The credit scoring system was created 50 years ago. A lot has changed in 50 years. It is still essentially the same. Maybe the algorithms have changed, but it is the same. It has now become exclusive rather than inclusive.

You cannot get, in many cases, the chance to rent an apartment unless they look at your FICO score, or credit score. If you go to get a job, they will look at your credit report and, if you don’t have anything on a credit report or if you have negative on it, you won’t possibly get that job.

Tavis: Given that this system, to your point, hasn’t changed in 50-plus years, let me just ask you pointblank whether or not poor people today are being exploited by that system.

Orman: Yes, sir. They most certainly are. Now we have somebody who does a thing for soliciting to get DirecTV. Do you know that, if you have a bad credit score, they charge you more to have DirecTV than if you have a high one? And if you don’t have a good one at all, they may even deny you.

So everybody should be able to have anything and everything based on what’s true today. The fact that people lost their homes, you were under water in it, they lost their jobs, they lost everything, these were middle class people that are now living in poverty, Tavis, poverty. They’re being penalized for something that wasn’t any fault of their own in most cases.

So I want to see a new system. I believe that the credit scoring system is broken. That’s my belief. I think, over time, with cell phone technology and everything else, we could create new algorithms where, again, people are rewarded for paying in cash.

They’re actually penalized for paying the minimum payment due every single month on a credit card that’s charging them 29% interest. Are you kidding me? But those people are rewarded today and the people paying on debit cards are punished.

Tavis: When you hear Mitt Romney – who may be the presumptive Republican nominee to run against Mr. Obama – when you hear him say, “I’m not concerned about the very poor”…

Orman: …’cause they have a safety net.

Tavis: Exactly. And in fairness to him, let’s provide some context here. He says, “I’m not concerned about the very poor nor am I concerned about the very rich. I’m concerned about the middle class.”

What I hear him say, to the point you’ve made, is that the new poor are the former middle class. But what did you hear when you hear him say, “I’m not concerned about the super rich and I’m not concerned about the very poor?”

Orman: I hear him say in his own words that he’s out of touch with America today. I am in touch with America. I’ve traveled throughout America as you have. I get more emails and calls when it comes to money than probably any other single person on television when it comes to money. I read what these people are saying.

How many years have I said, “The rich are getting richer, the poor are getting poorer and the middle class has disappeared.”? The middle class now, many of them, are living in poverty.

When he says there’s a safety net for the poor, here’s what he’s not understanding, in my opinion. These people aren’t just sitting around begging for money. These people aren’t necessarily on all the substances. These people are working, but they’re making minimum wage.

They’re making minimum wage and, by the time they’re three weeks into the month, they’re already out of money and they have to go stand in food lines to be able to feed their kids even though they are working. So they’re not falling into the safety net. The safety nets don’t even hold them on any level.

Tavis: How much whiter has this reality come? I say whiter because, as you well know, for so long in this country, poverty has been color-coded. But I’m watching your show on CNBC every week and I’m seeing a whole bunch of white people call in. They’re not just Black, pardon my English, they’re not just brown. Too many Americans.

Orman: It’s becoming real white. All you have to do is drive down into the neighborhoods where the soup kitchens are. Look who is standing in the line of those soup kitchens. Now I’ve been driving in those neighborhoods for years.

I’ve been looking, and they aren’t now just all African Americans or all Blacks or all browns, whatever. They are white and they’re standing right next to somebody. No, it’s become a lot whiter.

Tavis: I just got two minutes to go here. How do you motivate yourself every day to do what you do? I ask that because, with all the work that you have done – there are others, but you are the leading expert on these issues on television and on the best-seller list.

How do you motivate yourself to keep talking about this stuff every day when money lessons seem so hard to get for the American public and, at a moment right now, so many of us are trying to deal with the madness? How do you motivate yourself to keep teaching these lessons through the “Money Class” on CNBC and everywhere else over and over and over again?

Orman: One has to ask what is the goal of life? What is the goal of life? My interpretation of it for myself, a very wise teacher once taught me this, is to meet the needs of the people, places and the times around you and offering those services to God.

I believe in God big time and I’m proud to say I believe in God. I look around and there are needs that people have. Places have needs. These times have needs, and I have the education and the ability to communicate with it and help to solve those needs.

So every morning I wake up, I can’t even wait to go and see what life can I change today. It doesn’t have to be a lot of lives, but I can change one life a little bit here, a little bit there, and I hope that everything I create, people know that.

You know, I’ve created things for people. I give it away for free all the time. I hope people look into The Approved Card. I hope they go to TheApprovedCard.com and see the truth for themselves.

But I’m telling you, nothing’s greater in life to see somebody who doesn’t have start to value who they are and, as soon as they feel valued, they can change this world too, Tavis. They can change this world too.

Tavis: I am glad your hope is even now sustained. Suze Orman. You can see her, read her just about everywhere. Of course, “The Suze Orman Show” on CNBC, “The Money Class” on the OWN network and any number of books on “The New York Times” best-seller list. Suze, I’m always delighted to have you on this program, and thanks for coming to see us.

Orman: Any time, Tavis.

Tavis: I appreciate you. That’s our show for tonight. Until next time, keep the faith.

Narrator: Every community has a Martin Luther King Boulevard. It’s the cornerstone we all know. It’s not just a street or boulevard, but a place where Walmart stands together with your community to make every day better.

Narrator: And by contributions to your PBS station from viewers like you. Thank you.

Last modified: February 13, 2012 at 1:25 pm